Why a drop in cryptocurrency value shouldn’t alarm miners

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Let’s be blunt: it hasn’t been a great year for cryptocurrency. With frequent news stories about huge plunges and downward trends, many investors are starting to worry about the future of digital currency. But is it really time to be acting like a bunch of Chicken Littles?

It does seem a bit bleak when you look at the numbers. Bitcoin, for example, started the year over the $13K mark and is now down to “just” $6500. While that 50% drop might sound the alarm bells for many, let’s not forget it was only at $4K in September 2017. Year-over-year, Bitcoin is still showing some pretty big gains. That’s certainly no consolation if you invested heavily in the currency in Q1, but it is an indicator of the long-term potential. Bitcoin rose rapidly at the end of 2017, and that clearly was too much too soon for the cryptocurrency. It’s a volatile industry, and investors must be prepared for ups and downs.

Still a great time to invest

Although some signs are pointing toward a bursting bubble, it’s actually a great time to be investing in cryptocurrency mining. Here’s why a drop in cryptocurrency value shouldn’t alarm miners:

Lower value means less competition

If you’ve been in the mining game for long, you know how much competition has increased in the past year. The reason is pretty simple: currency values have gone through the roof. Everyone wants a piece of the pie. When the value goes up, tons of fly-by-night investors hop on the ship and start mining. When the value of a currency goes down, many people panic and stop mining it. More competition equals higher cost to mine it. So when the price of the coin goes down, it usually becomes cheaper to mine. A drop in currency value shouldn’t have you creating an exit strategy. It should make you see more opportunity.

You’re investing in the long-term future of the currency, not the current value of the currency

Smart investors look at the big picture. Cryptocurrency is here to say. There’s too much great technology behind it and too many heavy investors for it to make an exit anytime soon. In fact, “the vast majority of long-term holders of bitcoin are still way in the money and have shown no sign of cashing out.” Cryptocurrencies are extremely volatile. We’ve seen Bitcoin fall by as much as 30% in just four days. But even with these big drops, cryptocurrencies have still proven to be a solid investment that continues to recover and continue to produce great returns for patient investors. Cryptocurrency mining was never meant to be a get-rich-quick scheme.

Your equipment still holds its value

Let’s say the worst happens and cryptocurrencies really tank. There’s still good news. Even if you decide to drop out of cryptocurrency mining, you still have your equipment, not to mention all the coin you’ve mined. Remember that your mining hardware was your biggest monetary investment. You can likely sell your hardware for close to what you paid for it (sometimes even more). You’ll end up with a good chunk of cash and a load of coin that might go back up in value in the future. Cryptocurrency mining takes out a lot of the risk of the investment.

The right mining strategy

Of course, for any of this to work, you need a cost-effective mining strategy. That’s where mining colocation comes in. If you want to get the most out of your mining investment, then mining colocation with Compute North is your answer. Contact us today to find out how we can provide high-performing, scalable mining solutions that will help you overcome any drops in crypto value.